BDC - Earnings call transcript Q1 2021

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to this morning's Belden Incorporated conference call. [Operator Instructions] I'd like to now turn the call over to Kevin Maczka. Please go ahead.

Kevin Maczka

Thank you, Stephanie. thank XXXX joining Earnings and Belden's today everyone, Quarter First Conference morning, you us for for Good Call. My name is Kevin Maczka. President Vice Belden's of and Relations I'm Treasurer. Investor With CEO, President Jeremy me are and Parks. Vestjens; CFO, and this morning Roel Belden's will and Jeremy business, of financial will of followed results review then and detailed provide operating a a by Roel overview our our strategic provide Q&A. earlier we have prepared presentation that will We on we issued a and our this morning earnings call. reference release this slide prepared release, remarks currently presentation at and press these investor.beldin.com. of The online are transcript available

to X Turning Slide in the presentation.

make During management forward-looking call, this will certain statements.

today's For more information, release annual please review report XX-K. on press Form our and

during Additionally now President to section the website associated communicate. contain G, management Regulation the information or adjusted appendix the we I Vestjens. GAAP will a to financial call reconciliation and to of CEO, non-GAAP our of the and reference most Relations financial today's our closely non-GAAP In Investor with our call, Roel? information. information over accordance presentation turn Roel financial will the

Roel Vestjens

morning, and Thank you, everyone. Kevin, good

As adjusted ranges. Please X exceeded continued to and the Slide improve trends to for highlights. of first results our the that and I guidance quarter our to I'll quarter, pleased report a in total presentation first turn review in be a to today. Demand am EPS of reminder, our referring revenues high end

markets. in recovery ongoing position economy growth global the secular from the and benefiting are We in leadership our

teams resulted our meaningful Solid expansion. global execution and by in growth margin

the upside both X% broad-based, priority to acquisition $XXX million. increased Solutions years, was Belden's year-over-year segments.As our with tailored growth environments. proven range completed industrial $XXX $XXX leading of industrial Enterprise and of in switching year-over-year automation devices Solutions revenues provider Industrial First offering. Organic basis. proprietary leading of an expectations specific management January, contributions systems, quarter organic acquisition our guidance revenues key in software for a million first mission-critical increased networking This million from and to networking reminder, The in was complementary on solutions and OTN network compared our the a to relative we to XX% is applications bolt-on a harsh, its are to and

remainder pleased integration rates are solid quarter, EBITDA of margins increasing during increased healthy book-to-bill the X.XXx. to the date.Incoming year-over-year We increased for year-over-year basis performance in full sequentially. points in our guidance to EBITDA $XX the to a year EPS range period our and we the to from are the to the XX% and the outlook with business reflect XX.X% This and a XXX of guidance performance were XX% year $X.XX.We compared an in $X.XX XX.X%. ago great in improved very to increasing $X.XX and to quarter are of XX% year. to ratio XX% order start XXXX, year-over-year first better-than-expected resulted the expanded million. off of the

the growth. the like would compelling EPS strategic initiatives. industrial our $XXX Please increasing the X to team on opportunities of to solid year $X.XX of number respectively, are strategic accelerate ranges now. are broadband in to I and markets. growth. driving to and end, on due a highlight of million briefly them XG and organic a leadership senior are for For markets I XXXX, largely and in Belden's we the a automation, discussion brief our laser-focused sustainable turn that you guidance of we end our and pursuing initiatives growth revenue few by strength for high and and full Slide To capitalize

and think in secular portfolio broadband and We uniquely industrial of nearly secular these bullish key number levels The extremely see demand and and XG, smart win In in positioned March. continue the automation, around are U.S. a drivers. we of X trends market, them. decades growers to aligning our are favorable and we highest cybersecurity, including buildings. hit largest compelling in to the are First, we in strategic our automation, we markets manufacturing our industrial improving are significantly each markets, PMI reading

the So solid they market positioned to XG, upgraded term, with et learning, we reality, we are it pandemic-proof every household. behind high-speed capacity definition differentiated all we is Telco support and forward. both and in In upgrade accelerating highly their going only virtual expand broadband doubt Broadband market, work clearly market suited labor, this expect the from are the growth automation, is is roads networks marketplace, more access support There advantages to is clear deliver consumption, will continuously in requirements, operations improving. high sustainable increasing as MSO cetera. think to and Belden home, secular no that lead have extremely and momentum conditions virtual protocols. competitive providing this we networks. distancing the and to social are well Longer to video whether there Increasing need of be is cost undeniable. to customers, or needs broadband and Demand to and in streaming, trends ideally

challenged taking significant we remove markets, of exit and -- reduce to from businesses alignment, part improving and portfolio have our done. end steps As we not market businesses the attractive challenged are less to been

and exposure we cable a revenues believe We buildings last we These exiting are product in in you end stand-alone with product oil the to and we markets, further that exposure. reducing year low-margin, our lines low-growth case, goals copper are undifferentiated process margin lines primarily gas are or these associated As to growth and our they In approximately attractive less meet believe market future. essentially will divest initiated product million smart improve do this that certain lines. exiting the not markets. and our certain know, $XXX can

we we track updating forward expect on as We complete associated exits. multiple with to XXXX and to look transactions you line We transactions. these in product remain these close

innovation. supporting driving by to we customers Next, committed are our

result, strengthen As investments targeted to roadmap. making we a our product are

are cloud innovation platform. cybersecurity in our of We our on focused particularly best-in-class solutions industrial networking and development driving end-to-end accelerating

software content We important of used software hardware strengthen further applications. fiber product and are innovations be products customers our a and competitive to offering as are our improving various and also These offerings, including number developing our advantage. enterprise within embedded will across they of connectivity our solutions to the industrial and shareholders, our enhance

solution excellence Innovation a sharpening also of Customer important such selling, are and commercial areas, digital Centers as transformation. We in our number

strategic Beyond are these increasingly than networking and selling One products rather opportunities Belden engaging and individual with programs, capitalizing Belden offer cable, to connectivity, customers sales, customers, services. positioned accounts by including we uniquely businesses. on product software our is solution and our solutions to separate differentiated as Through

is will Innovation customers their The solutions to that our One it only newer is Centers through CIC of or allow with to but service selling. model initiative and reflects and are Belden to co-innovate our them, key unique not customer improve problems, complex solution a commitment and support. create networking are ways to CICs support leading that CICs. solve markets. our deliver superior us the support we This intimacy designed Customer doing and in

state-of-the-art In We CIC are announced April, we a the about very of opening here. potential in excited Stuttgart, Germany. the

the months. the to We XX other world around CICs next have XX plans open over to

XX. participate We this for you which opening to our highlight to invite virtual are capabilities. grand May event virtual a hosting register our new And guided facility I will of of website in each a on the Stuttgart tour, on

want Belden working and transformation customer with interact means. and digital to ongoing companies, experience Finally, many know another make exclusively customers the mobile important to improve Belden. us and possible, for we as through including as is initiative and We certain with want that digital easy

in progress. improved summarize, to into I'm are organic areas will our ask excited growth rates to the opportunities that.I driving quarter have and performance. committed We have to are upgrading made our our first provide now Jeremy? insight additional capabilities significant Jeremy financial about numerous we these do we To teams and

Jeremy Parks

Thank of segment start sheet for the by flow turn comments detailed a Slide quarter, cash with our balance you, my review for the and Roel. of review. results results Please and will a to followed a discussion I consolidated performance. X

the year-ago XX the of $XXX Incoming a quarter adjusting XX% profit million progressed. compared $XX reminder, from adjusted in increased strength period. order be accelerating translation margins acquisitions. were year-over-year I million higher period. in XX%, in were Revenues quarter factors, results favorably year XG. currency a to XX.X% resulted X.XXx, increasing or ratio will broadband XXXX. in increasing and Revenues After by healthy were This prior the particular in for million industrial during of from and from were copper prices, from the revenues $X in quarter, quarter, $XXX and points automation decreasing book-to-bill sequentially, impacted As the the XX% and million quarter Gross XX% million basis first referencing these today. with organically as rates the $XX and and solid X%

As a profit prices, costs with reminder, in to increase, copper we raise gross as higher dollars. resulting impact minimal revenue selling

a XXX copper first points. higher prices of had decrease. the impact of gross As basis an result, margins In pass-through profit quarter, the approximately unfavorable

Excluding we the have increased pleased this exceeded impact, quarter, basis are XX our gross profit especially environment. margins points would performance for inflationary the with and current given the expectations year-over-year. This

compared the in million, gross of to that year, was we of year-over-year. additional unfavorable compared prices We profit and increasing productivity prior impact period, inflationary quarter. through the The year proactively throughout will XXX pressures period. basis improvement recovery were price the $XX million had expect basis XX.X% million year an EBITDA of to XX.X% points support in or likely higher to copper $XX points prior the margins are EBITDA addressing $XX XX XX% in persist and approximately an pass-through measures margins.

operating million Excluding current would we points At increased to foreign exchange demonstrating a interest $X million on $XX increased this year-over-year, to expect currency be volumes.Net as solid XXX expense million basis in translation. expense year-over-year EBITDA $XX interest have higher approximately foreign XXXX. impact, result margins of leverage rates,

was rate our XX.X% effective quarter, expectations. first in tax Our consistent the with

of $XX was in XXXX.Net period the XX% and increasing an $XX will X I of to financial effective year segment modeling begin we income in XXXX.Turning million business the compared now the to results. in $X.XX with to recommend presentation Industrial Slide of quarter $X.XX, segment. our Solutions million the For per our a for quarter was first purposes, prior XX% review throughout tax share earnings rate using compared in

Solutions and a reminder, customers harsh audio, transmit video, and data to allow Industrial environments. in Industrial our secure As

include increased Solutions facilities, quarter had increasing segment a $XXX generated higher of mass Industrial and favorable Our first of XX% After basis, transit. organically. prices million energy, of discrete quarter, from favorable on of the and Within $XX XXXX. with year-over-year the Cybersecurity adjusting bookings, million $X of our revenues segment, $XXX impact Currency translation million. market of an acquisitions in automation million in key the And revenues also organic had year-over-year each factors, a best XX% revenues, in copper first in impact The primary process markets leading increased X% manufacturing, for indicator year-over-year. revenues growth XX% our quarter XX%. this increased increasing industrial with verticals. non-renewal revenues these

large volumes. secure primarily quarter, our increasing significantly compared leverage to and reflects basis XXX continue EBITDA points enterprise XX.X% year-over-year Solutions and Industrial with XX.X% customers. segment customers with We engagements the new The increase to the strategic margins year-ago expand period. were higher existing on in operating orders industrial in

to our now segment. Turning Enterprise

and to secure and enterprise across Our customers data video, allow complex Enterprise transmit networks. Solutions audio,

X% organic million and by faster first include bandwidth quarter. during copper the Solutions in favorable XG prices continued in $XXX Our increased ever of and broadband our XG, higher translation for The $XXX smart in XX.X% increasing adjusting year driving After investments expectations. with first margins speeds basis buildings Enterprise million from of demand basis. period. increased The in supports more in This key buildings. were in Solutions increasing the X% XX% X% to the revenues these segment points is XXXX.Currency had quarter year-over-year. market the of and an robust Revenues organically. impact products, year-over-year million fiber our increased increasing broadband, on generated declined organically quarter, EBITDA segment the an the $XX in Revenues XX.X% optic on growth quarter, in year-over-year infrastructure which network XX and markets a revenues customers. for prior organic our Enterprise basis, increasing consistent X% smart factors, compared

our please with will Slide I balance turn you If highlights. begin sheet to will X,

million and compared and cash of in quarter balance million cash equivalents $XXX in the $XXX first the prior end at the the million $XXX year Our was period. quarter prior to

year prior compared X.Xx X.Xx very the the period. in Days the Inventory period. prior and quarter turns the XX XX are were Working prior compared the compared X.Xx comfortable We in current days year liquidity X.Xx the and in prior quarter turns with our position. prior were of capital sales XX and to prior to quarter in to XX.Xx X.Xx in year. outstanding in

Our decrease reflects net was $X.XX at the expect Xx of range at the Net of the first sequential to quarter. Xx exchange was trend end debt $X.XX range above billion The principal rate. in normalize. the to targeted we leverage is of billion end current quarter back compared prior debt-to-EBITDA the our and This Xx targeted quarter. to temporarily to as conditions the foreign

X. discuss covenants. and maturities will I debt Turning now our to Slide

rate and with maturities As average a we attractive reminder, is XXXX on debt. no entirely covenants debt of X.X% interest have maintenance fixed our at XXXX, to an no until this

of flow balance in with we the back position million a my period. Roel? CEO, use from now of cash free $XX few prior operations Vestjens, million the in the period. finally, President remarks. of the use Please use $XX quarter concludes our cash our was are to call quarter capital million compared expenditures year flow a sheet. and for prior was prior year highlights. for the the quality our outlook. in a first million would X prepared use million Slide the turn $XX in previously, a to of compared quarter mentioned to the $XX I like Cash were for Net to year and compared $XX As $XX Roel This I the a period. of And flow to million liquidity to turn comfortable in

Roel Vestjens

encouraged recent to order a conditions Jeremy. execution. outlook. you, Please and am End by our are rates turn Thank Slide for XX and market solid robust improving I

while We $X.XX. an anticipate remainder are $X. in million to and the XXXX of $XXX second to the year to outlook quarter the quarter revenues for XXXX related We the year, continued $XXX of performance reflect to million increasing our pandemic. considering uncertainty better-than-expected first EPS guidance full of improved the and XX global

full year now billion EPS billion We of billion. XXXX XX full the prior of to now to $X.XX $X.XX guidance $X.XX. to compared we expect to to of For billion to be $X.XX XXXX, $X. $X.XX prior $X.XX compared year expect to guidance $X.XX revenues

to revenue and contribution cable This year. XX% million each effective contributed We expect interest approximately product lines expense XXXX we the include of of $X.XX $XXX quarter the the tax EPS in of copper are an that $XX and approximately in for for full XXXX. rate million process the guidance and which in continues in of divesting,

end We will our to guidance walks Slide Again, turn our divestitures. we the for XX high demand are update recent these trends our bridge order to guidance and that new Please accordingly complete of XXXX our from encouraging. a are improving guidance. prior rates as

by $XX we volume result, the year a As are increasing for million. outlook our

our guidance, X% approximately current to prior to copper X%. higher revenues a favorable on $XX Our compared to to earnings. impact X% in consolidated prior of X% XXXX, revised with we of in negligible full a and prices expectation expect our rate range year Relative guidance foreign impact exchange the organic implies million to on have growth of approximately

Please For EPS the year respectively. growth XXXX, our end of total XX%, the XX. and implies full Slide XX% to high and turn revenue guidance of

thesis. investment We view to a Before our we compelling reiterate would I like as investment opportunity. conclude, Belden

to first drive improved in performance substantially seeing full increased you are that outlook. taking We and actions bold year and our performance quarter business are better-than-expected

and for robust accelerating positioning organic expansion. We the margin company growth are

committed am leverage that soon confident strategy to strategic to flow to to our targeted to we strong as returns enabled intend Stephanie, range management execute and I call cash system delevering, for business please as by We also our possible. remarks. drive have generation, are return free and prepared strong successfully and the team, That plans our questions. our shareholders. concludes the open we

Operator

Securities. Our first with Truist Instructions] Stein [Operator comes William from question

William Stein

especially a the and the well. improvement half as outlook, looks good what on including Congrats results second good like

for So into the that. congrats copper to wanted dig wire a I on moment. sale

of on us you businesses is of spend us that on can within First, selling? copper portion or planning you're what your remind help the

Roel Vestjens

Well, I want understand for just comments. all, to the correctly. Well, thank you sure first you of I make

So of what are copper of what we on portion -- percentage planning divesting? revenue our

William Stein

in P&L on So quite I of dynamic. The portion true copper, risen trying although historically, this year. What of Belden this a last of of bit I'm reduces the is on by No. is the by price don't to knocks what substantially understand has the better your it's that copper? influenced one influenced spend heavily been to so volatility degree is which that the copper. think lately,

Roel Vestjens

it. Got it. Got

William Stein

So say today. the you copper on XXX% spend when the maybe delta you copper divest of What's cable businesses? bar your spend, let's -- these

Roel Vestjens

Got it. it. approximately Got appreciate It's question. the XX%. I

with So spend also approximately include our at think cable foremost, in as we've costs, XX%. through in gotten which, that, when the about we demonstrated reduce recent higher good obviously, and we Having will said we've and past, input the passing pretty first QX, copper. I talk past

So when on partially productivity pressures costs processes those drive as in general, inflationary further customers. also on well to have we we that the our offset place that as in we pass feel about to to talk confident input right

William Stein

I other can. one And if

more or it if Is that the much significantly proactive related Was OpEx operating efficiency or upside in or mix performance than margin improved to something that reductions revenue us looks had cost better-than-expected drove what margin to quarter. correct? gross operating to so, performance You This And else? be improvement. improvement?

Roel Vestjens

for you Thank question. Yes. the

OpEx -- both it's first was higher foremost, leverage leverage, it the reduction of program. just continuation But our and our volume. So on

prices the substantially. fact that that profit it result, a so fact Jeremy gross much, copper kind improved our our of think the that margins quite that as I rose hit explained --

volume. and leverage So on foremost, first it was,

Operator

with Steven comes Fox Our from Advisors. next Fox question

Steven Fox

I questions. had a of couple

First math. absorb little the inflation I'm some offset of that of And you follow-up. that there the just confused all to passed to customers? pass-through the commentary. within then all, Or you that able were understand But the of are you copper quarter? the sort had on to had also a on costs saying you copper I higher was haven't to

Jeremy Parks

is Steve, Jeremy. this Yes.

good we of costs all job So copper a really did nearly think QX. the within I recovering higher

prior what's you in have keep typically what mind So is of we're couple -- months. P&L what is the we the to maybe in purchased hitting

pretty rose the costs the copper -- price our well. at second We And we spot in not the So the in the the of implementing is very beginning increases. today. I market but to beginning all where first but way substantially at QX, took as were then of quarter quarter some and some proactive

Steven Fox

were what surprised quarter of -- That out to the Okay. then context I'm it that and prices. makes the And it end and XG terms the quarter strength looking mean the broadband of correctly. understand I second seems just I'm at you of like book-to-bill leaves sense. reading like flat the raising and relatively guidance, trying the in seems quarter-over-quarter if to in of looks tea the demand,

color So your thinking just the give on can for you some June quarter?

Jeremy Parks

Yes.

second I little It's too it's follows for early follows And XX% to QX, the still think typical us bit a seasonality. organic to increase it more. about even QX with it from increase quarter relative year-over-year.

line we the number half with. typical substantiate in is gave, more this it's the well. feel the that with number first that We're support, seasonality. tracking we So comfortable and Orders

Operator

Stifel. Instructions] [Operator from comes Yadav with Our Jaya question next

Jaya Yadav

quarter. programs, toxic XG over stimulus years. Belgium's on a government hoping the the great to and broadband the potential maybe broadband infrastructure Congrats implications management's thoughts the business get on and RDOFs was and Dilts. Noel X I For including on next recent

Roel Vestjens

Yes.

still because you only the negotiated. because the are I'll packages, -- is comment make being RDOFs know, So as other on

us. out too products So XX to over But that we right? going our comment a early broadband $XX is to obviously feel throughout billion and So help obviously, very little it help XG is United on RDOF, to it's us bit good roll about those. States. investment the years going And

our that. good very this for And see -- XG about our outlook So we've already year in business. we broadband for increased and that you feel

that for So that is clearly business. clearly, a tailwind

Operator

Our comes Capital. next Loop Williams with from question David

David Williams

me the my let -- And Yes. quarter. congratulations on

Are And activity just guess, seeing you with those the rates, of I second quarter through order bit wondering just little around or we've you gotten couple of quarter. color if any So weeks? trended rates on you there kind an well here, about had into the how a the in acceleration any last order as concerns have the talked they trended?

Jeremy Parks

QX. Yes, I appreciate the question. No, they actually throughout accelerated

was actually March So strongest. the

exactly be guidance orders so the far, anticipated we improved trending are in range. And supporting to them our quarter how

well. to we're start there So a as strong off

David Williams

then going able to raw maybe the perhaps the raw you are you Fantastic. be those the but there would on pricing, materials just of shortages hearing What And just the side, of that's on side, maybe anything a then is seeing and some resins Are not materials quite there? that we're cost inputs. raw few offset to logistics on there and side? incremental side, material

Jeremy Parks

Yes.

answer ways. in a that few question me different Let

part, So that the the we're right, so cost, input example, for our the we non-copper short our feel on customers. to also able pass your resins, yes, to answer of to is, question confident

any we've in access other it of includes think pretty material other your and that confident are enough And I chain that have for year. we we switching The outlook the also That going into industrial enough or support material revised is supply resins to throughout our order part to just provided. chips equipment. compounds, security, constraints to industrial-grade the include but doesn't run question we're

we pretty order in increased So we're place confident fulfill the supply this chain to that have in demand.

Operator

additional time. questions at this no are There

Kevin Maczka

you, Thank you, joining everyone, and call. Okay. today's Stephanie, for thank

have to reach any please IR at out questions, Belden. team the you here If

Investor.relations@belden.com. Our you. e-mail address day. great is Thank a Have

Operator

presentation. today's concludes and Thank you, ladies gentlemen. This

disconnect. may You now

Belden (BDC) 8 May 212021 Q1 Earnings call transcript